For discussion and debate about the ethics of health care organizations and the wider health system.

Tuesday, April 6, 2010

Massachusetts Health Insurers Sue the State

The health reform pot is boiling over in Massachusetts!

In a post three days ago I described how the Governor rejected 235 of the 274 insurance rate proposals for individuals and small businesses that were to have gone into effect on April 1. Yesterday Blue Cross and Blue Shield of Massachusetts, Harvard Pilgrim Health Care (where I direct the ethics program), Tufts Health Plan, Fallon Community Health Plan, Health New England, and Neighborhood Health Plan filed a suit against the state to reverse the decision. Here's the statement made by the Health Plan Association:

Last week’s decision by the Division of Insurance to set an artificial cap will do nothing to fix the real problem of rising health care costs. The Division’s effort to artificially cap rates is a reckless decision that is based in politics and will wreak havoc on the entire health care system. It ignores recent reports from the Attorney General and the Patrick Administration, including the Division, that have pointed to a number of factors for rising premiums, most notably the market clout of providers and provider rate increases.

This unprecedented move by the Division is likely to cause greater costs and confusion in the marketplace and will have the effect of splintering the coalition of groups that worked in 2006 to pass the state's landmark Health Care Reform Law.

Four of the five major health plans experienced operating losses last year. The rates that the health plans filed for April 2010 are actuarially sound, which is the basis upon which the Division’s decision should have been made. The Division’s decision has capped rates at levels it knows are insufficient to cover the cost of medical services and will result in collective losses to the state’s not-for-profit health plans that will exceed well over $100 million in 2010.

Massachusetts is home to the country’s best health plans, which are consistently rated tops in terms of quality and member satisfaction according to independent national accrediting organizations, including the National Committee for Quality Assurance. We will continue to work with the Legislature on meaningful reforms to help address the underlying factors driving health care costs to provide real, long-term and substantial relief to small businesses this year.

The insurers suing the state are all non-profit organizations. 90% of the premiums they receive are used to pay for medical services. One observer compared trying to control health costs by capping insurance premiums to trying to stop the incoming tide with a line in the sand! I speculated that the Governor understands this, and that in addition to playing politics by attacking insurers, he might by trying to shake the system by applying a two by four to a vulnerable (and politically advantageous) point - the insurance industry.

Trying to control health care costs by (a) capping insurance premiums while (b) ignoring increases in the 90% that comes from provider charges in (c) a political context that vilifies insurers as "villains" is (d) not a promising approach!

Ten years ago Tufts Health Plan tried to reject the price increases Massachusetts General Hospital and the other Partners HealthCare members were demanding. Partners withdrew from the Tufts system. Tufts subscribers raised a ruckus. After nine days, Tufts backed down. The Boston Business Journal summed up the situation this way (see here):

Until about a year ago, insurers were in the driver’s seat. Now, the big hospital networks, especially Partners, have been calling the shots. The likely outcome, say experts: significantly higher premiums for Bay State employers.

Blaming one cog in the health system wheel may be good short term politics. Having applied a two by four to the state health system, the Governor should now convene insurers, providers, employers, and public leaders to work together with the state to bring down health costs. That would be real leadership.

2 comments:

For many years, America’s health brokers have been offering health insurance to individuals, small businesses and large businesses for decades, yet the enrollment statistics have revealed a steady decrease on an annual basis. The number of uninsured Americans is estimated to be as high as 30 million, and the Health Care Reform Act offers a solution. Not only will there be a higher enrollment number for America’s health brokers, but as of 2014, it will be required by law for every American to obtain health insurance. Every single American will be impacted by the New Health Reform Bill, making it one of the most important measures of the 21st Century.BusinessesThe main focus will be on businesses of 50 or more employees, in which they will be required to offer individual health plans, as well as family plans to all employees or face some stiff fines from the government. The amount comes to $2000 per uninsured employee, though there are exemptions to this fine. If you as an employer assist an individual with acquiring a personal health insurance plan through an open market called an exchange, then it would result in no fines. This only applies to an individual who makes a certain amount under the Federal Poverty Level, and the premiums are over 8% of his annual income.America’s health brokers can rest easy in the fact that there will be expanded coverage, though there may be more competition. With the rise in individuals who will have health insurance, there may not be as large of a risk as one may assume. Though the new bill will require America’s health brokers to enroll individuals with pre-existing conditions, there will also be a new population of young individuals who will be insured with fewer health problems. It is understood that larger companies already provide a group insurance plan (HMO, PPO) that covers all areas of needs for the population of employees. These policies will change very little, but there may be some changes in where the funding for the new health care plan will come. It is proposed that those making a certain amount of money, both individuals and couples, will be taxed at a higher percentage than others. This will provide money that can be used for the exchange and making sure that all individuals will be offered an affordable health plan. There are still a few years before the plan goes into full effect, though some of the measures will be enforced immediately. There will be plenty of time to sort out the details and iron out the difficulties. As for the plan, anyone who does not have health insurance as of January 1, 2014, will be penalized a certain amount of money, and this amount could become worse if health insurance is continuously neglected. There has never been a better opportunity for America’s health brokers in terms of acquiring a new customer base-a broader customer base. Also, there has never been a better time in history for individuals being provided with the resources for the necessary medical treatment. This is a very unique time, with history in the making. Finally, there will be health care for all.

Thank you for your comment. I apologize for the delay in posting your comment- it went astray in my email.

I'm guessing that you may be an insurance broker. I've gotten to know somethng about the broker's role from having two brokers on the ethics advisory group that I chair. We depend on them to bring the perspectives of small businesses into the discussions. Our health "system" is extraordinarily complicated, and small businesses don't have sizeable human resource departments to handle the area. Brokers have helped me get a more vivid sense of how devastating U.S. health costs are for small businesses that want to do the right thing by their employees.

About Me

I've been in health care for almost 50 years -- as psychiatrist, medical director, teacher/researcher, consultant, leader of the ethics program at a not-for-profit health plan, and patient. I'm a clinical professor in the departments of Population Medicine and Psychiatry at Harvard Medical School. With colleagues I've written two books about health system ethics: "Setting Limits Fairly: Learning to Share Resources for Health," and "No Margin, No Mission: Health-Care Organizations and the Quest for Ethical Excellence." I've had my Medicare card since 2004.

About the blog

Medical ethics has traditionally focused on the individual patient, the individual doctor, and the patient-doctor relationship. But today most care occurs in organizational settings – group practices, HMOs, VA and more. Insurers and other third parties have a huge influence on the exam room. Medicare shapes care for the elderly and disabled. Medicaid does the same for the poor. Hospital cultures and policies affect what sick patients experience, for both better and worse.

All this means that the ethical quality of health care is profoundly influenced by the ethics of organizations. We can’t have ethical health care without ethical organizations.

Organizational ethics is what this blog is all about. I discuss how organizations engage with the ethical dimensions of their work. I look for approaches we can learn from, not simply to wring my hands and rant. I hope the blog stimulates discussion and debate, and encourage readers to present their own perspectives and suggest topics for postings.